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How To Manage Customer Churn For Your Marketing Agency

How to Manage Customer Churn for Your Agency

This blog post is a condensed summary of key points that were discussed in Synup’s webinar titled How To Manage Customer Churn For Your Agency, featuring Dave Schneider of LessChurn.io and Senthilvel Prakash of Synup. Click here to view the full webinar for free.

Retaining agency clients is often just as difficult a task as gaining new clients, but there’s great value in working on client retention and reducing customer churn for your agency. Studies show that just a 5% increase in customer retention can boost a business’s profits by 25% to 95%. Even the most successful companies have to deal with customer churn, and understanding what causes loyal customers to leave is crucial for sustainable business growth.

As an agency, you need to understand what the different types of churn are, and how you can calculate churn accurately for your agency. Beyond that, you’ll need to understand the reason your customers are churning, and work on the different things that you can do to prevent and reduce customer churn.

Let us take you through all of these things, one by one.

Understanding customer churn

Before we move along, let’s take a closer look at the different types of churn.

Customer churn

Customer churn, also known as customer attrition, occurs when clients stop doing business with you. For agencies, it can be best defined as the the percentage of customers who cut their ties with you in a given time period. It is a critical metric, since retaining existing customers is more cost effective than acquiring new ones. You have already gained the trust of your existing customers and processes are already in place, while you need to start from scratch for a new client.  

Revenue churn

The percentage of revenue that is lost in a given time period can be defined as the revenue churn of your agency, and it usually occurs as a result of churned customers and downgraded subscriptions. It is different from customer churn, but both are equally important and can have a lasting impact if not measured and managed well.

Voluntary churn

Voluntary churn is a decision made by the customer to actively switch to another company. This usually happens when the client has had a bad experience with the agency in terms of the quality of work, customer service, or dissatisfactory results with performance in general. Customers who churn voluntarily will likely do it by not renewing an existing contract, or terminating the contract before it runs its course with your agency.

Involuntary churn

Involuntary churn is mostly circumstantial, and happens owing to a customer relocating, having a family exigency, etc. According to ProfitWell, this type of churn makes up 20-40% of overall churn. Even the most satisfied client cannot avert involuntary churn.

How to calculate customer churn

The easiest, and most straightforward way to calculate customer churn for your agency is by using this formula:

“number of churned customers / total number of customers”

The number of churned customers is how many people have left your service over a time period, out of the total number of customers you had during said period.

For any given month, you have three kinds of customers:

  • Those that signed up prior to the month. These customers will come up for renewal in the current month.
  • New customers during the month.
  • Newly churned customers during the month.

This might be a little complicated as businesses are dynamic, it changes everyday. You have new customers signing up, and on the other hand there is customer churn.

For instance, if you have 4 customers cancel and you originally signed 100 customers during that time period, your churn rate would be 4%.

4 ÷ 100 = 0.04 x 100 = 4%

Here’s a great example of calculating customer churn

How to Calculate Customer Churn -  Source: Profitwell

Source

What’s a good churn rate?

The lower, the better! Customer churn rate that is considered “good” for one business might be a nightmare for another. This is because of the fact that business models differ, and sometimes, even companies with similar business models might define churn differently.

You can even have negative churn, that is if people are upgrading more than they are cancelling. In other words, even if you lose customers, you’re still making more money as your existing customers have upgraded and are paying more for your service.

The reasons for customer churn

Reasons for voluntary churn

Competition: Even if you’re helping customers achieve their desired outcomes, they’ll still churn if they believe a competitor can do a better job. There are many agencies that offer better services in terms of the quality of work, time management, customer service and also price. So you need to be ahead of your competition to avoid this kind of churn.

Missing Features/deliverables: This is when you fail to meet your targets that were initially agreed on while getting the client on board. So when you fail to provide services as promised, you’re bound to lose your customer.

Bad Service: Customer service is extremely crucial, whether you’re a service provider or a product. If you fail or take too long to tend to your customers’ requirements, your customers will leave you.

Price: Sometimes, when a company is trying to cut cost, they let go of external agencies. They might be aware of the prices while signing the contract, but over time they might become price sensitive or just trying to cut corners. On the other hand, if there is a sudden hike in prices during the tenure, it often leads to customer churn.

Bad Onboarding: When a customer signs up with your agency, they come in with a set of expectations. Therefore, having a proper process of onboarding a new customer is extremely crucial, as that helps you set the tone for what exactly you would be doing for them. A welcome email introducing the team, starter kit or any other educational material is a good way of onboarding the customer. This kind of process makes the customer feel valued and they get a sense of reassurance.

Reasons for involuntary churn

Leaving the company: If the person in charge is leaving the company, or getting relocated. This kind of churn can’t be controlled.

Company shutting down: When the company suddenly runs out of business, or is going through some major business changes, they might end the subscription/contract. This kind of churn is very rare and unfortunate, and can’t be controlled.

Outdated payment methods: When a payment fails due to outdated methods, such as expiry of credit card, insufficient balance, etc. Though involuntary, this type of churn can be controlled by sending prior reminders to your customers asking them to renew their card details, etc.

How Your Agency Can Reduce/Prevent Churn

Provide great service to your customers

Do’s:

  • Make the value of your service clear
  • Keep up with the newest tech and updates in your industry, and implement them in your workflow to make your work stand out from your competitors
  • Engage the customer through phone or email
  • Take customer feedback seriously and work on it
  • Set up processes – from reporting to sending reminders, make sure you follow a consistent pattern

Don’ts:

  • Force people into contracts or annual plans
  • Hide contact information or become unreachable
  • Include additional fees when the customer contract ends

Value addition by providing great tools

Think of a product or tool you can integrate into your service to fetch important data and metrics for your clients.

Here are some great tools that will help you enhance your service and prevent customer churn:

  • ProfitWell’s Retain: Combines world-class subscription expertise with algorithms that leverage millions of data points to win back customers.
  • Baremetrics: Subscription analytics & insights. One click gets you hundreds of valuable metrics & business insights!
  • ChurnBuster: A proven set of tools to reduce churn, by resolving failed payments and delivering automated support to your customers.
  • LessChurn: A tool that prevents customers from cancelling, while collecting feedback from those who do.
  • Synup: A local marketing and business insights software that manages a business’ local profiles, tracks search rankings, and provides search + engagement analytics from their online profiles.

Customer Engagement & Feedback

Be proactive with your communications, always keep your customers engaged and also ensure that you update them on a daily/weekly basis about the work in progress. It’s mostly customer frustration that leads to customer churn.

Loyalty programs:

Make your loyal customers feel valued by going an extra mile for them. Remember that they’re your agency’s biggest asset.

A history of your interaction with the customers can show how deeply they are involved at each stage, whether they had any problems with the product, and whether these issues were dealt with.

What you can do is segment your customers into groups of profitability, readiness to leave, and their likelihood to positively respond to your offer to stay. In this way you can better predict customer churn.

Rewards

Surprise your customers by giving them unexpected gifts or rewards. It can be as simple as giving your best customer a recognition award, or sending them a gift voucher on Christmas, or any other special occasion.

Customer Service:

There is nothing that beats good customer service when it comes to retaining and reducing customer churn. According to a survey by Oracle, the biggest reasons why customers leave is because of poor customer service.

Make sure you are quick and responsive to customer queries. This can be as simple as replying to emails on time or just being available on call when they need you.  

Retention Manager

Have a dedicated account manager who can help your client with any sort of communication. When customers feel they have a personal relationship with someone in the agency, who is always available for their requirement, they will have no reason to leave.

Exit Surveys

Customer churn can teach you a whole lot about your business. Ask your customers what forced them to cancel the subscription in the form of an attrition or exit survey is a great way to learn from your mistakes. Churned customer comments could actually help you win new clients, as you can implement your learnings from the feedback into providing a better experience for your clients.

Pro-Tip: It helps to give customers a drop-down list of reasons (e.g. too expensive, no current need, dissatisfied with service). Customer feedback can shape your retention efforts or sometimes even stop them from leaving.

30 / 60 / 90 day milestone feedback

Monthly or quarterly customer satisfaction surveys serve as a useful retention tactic. This helps you know your customers better – what they like about the service and what they don’t, and will give you an opportunity to improve and keep the customers happy.   

The research should:

  • Identify areas that needs improvement and prioritize product and service.
  • Explore customer priorities and understand them better

The survey should be precise and sent periodically to gather response and accurate data.

What next?

Managing customer churn at your agency and working on reducing your churn rate is important when you’re client base grows. Take active measures to prevent and reduce customer churn right away to nip the problem in the bud.

Varsha Vishwanathan

I am Varsha, the Community Manager at Synup. Following and talking to journalists and influencers is not just a part of my job, but something I genuinely love! I cook to de-stress, and good music and dance gets me going; love drama, and secretly wish I was an actor.

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